Vivantio investigates the Pros and Cons of On Site and Hosted (Software-as-a-Service) Service Desk deployments
Traditionally, introducing information technology into an organisation required some significant decisions about which technologies to buy in to.
Europe, Australia and North America (February 19, 2008) –
Traditionally, introducing information technology into an organisation required some significant decisions about which technologies to buy in to. So for example, automating a process and improving management information required long-term commitment to a server platform as well as choosing products to run on it. Line of Business (LoB) managers have always found it frustrating that their selection of products is restricted by IT policies.
From their point of view it seems ludicrous that they should have their choices limited by the IT department. And from the IT department’s point of view it seems unrealistic that they should be expected to provide a hugely diverse range of platforms and get lots of disparate products all talking to each other, particularly when they are asked to do so with very limited resources.
Outsourcing is one way of offloading the technology issues, enabling the organisation to focus on the process and managing costs via the outsourcing contract. But outsourcing only went half way there. It still required a huge investment by the outsourcing company to set up and customise the service they were agreeing to deliver. Therefore, the customer still had decisions to make about locking themselves into particular technologies, albeit veiled in an outsourcing contract. Then came a new model for delivering and supporting applications called Software as a Service or ‘SaaS’.
SaaS has already created a big shift in the IT market as many, both mainstream and niche application areas such as Customer Relationship Management (CRM) have embraced it wholeheartedly and many IT vendors have chosen to transform themselves, or build new businesses as Application Service Providers (ASPs) or SaaS providers.
Other software businesses including Vivantio have built their offerings from the ground up, to work very effectively both on On Site and On Demand platforms. This article explores, in an objective way, the pros and cons of On Site versus On Demand service desk deployment with the intention of offering some guidance to those having to make this decision in the coming months and years.
Pros of On Site
1. One obvious reason for going for the on site option is that you can’t find a SaaS service desk provider that has the application your business needs. It’s still an emerging market so there is more choice On Site.
2. SaaS is still a relatively young method of delivering and supporting software and although it has gained massively in adoption in some software application areas such as CRM, it is still true to say that SaaS in service desk is not yet mature despite strong offerings being out there for some time.
3. There might be a specific element of the SaaS-delivered service desk offering which doesn’t meet your servicing or after-care requirements. Perhaps the SaaS provider only offers support 9 to 5, Monday to Friday and your operation runs 24/7; or you specifically require SSL encryption but the SaaS provider doesn’t offer this yet. Make sure regardless of the delivery method, that the application itself meets the needs of your business in terms of both functionality and ease of use.
4. Data protection issues: some companies have specific legal requirements stipulating where they can store customer information or personal data. Perhaps this data must reside within a particular country but the SaaS provider might use offshore data centre operations. So questions along these lines need to be asked and satisfactory answers obtained.
5. Some organisations prefer to make upfront capital investment for sound financial reasons. The company may be geared to the purchase of IT assets such as servers and software licences.
6. If Internet access is non-existent or highly restricted as is the case in some government departments including the Ministry of Defence and the police, then clearly SaaS isn’t easily deployed.
Cons of On Site
1. Capex not opex: A prime concern of some finance directors today is reducing capital expenditure (or capex), preferring to buy goods and services out of operational expenditure (or opex) budgets. There are very sound accounting reasons for buying in this way, not least of which is that cash flow tends to be stronger. Opex naturally favours SaaS deployment as you ‘pay as you go’, normally via monthly subscription instalments rather than paying up front, thereby creating uncertain costs of ownership associated with owning and managing hardware that sits in your offices.
2. Licensed anti-M&A: In a situation of merger or acquisitions the software licences owned by the company being acquired may be non-transferable and rendered invalid. In most cases the software vendor will re-licence the software to the new company rather than lose a customer, but these license terms come into play if the purchasing company is a competitor for example. For this reason, licences aren’t usually considered assets anyway.
Pros of On Demand or SaaS
1. No upfront: The On Demand model means very little up front commitment (in contract term and financial outlay).
2. Agility: SaaS providers are generally geared to very rapid customisation and automatic upgrading of their platforms. Once written and tested, software improvements can be quickly and seamlessly rolled out to customers.
3. Service focussed: IP-based standards help keep the entire organisation’s IT infrastructure working well together. With this back drop in place, LoB managers can make decisions based purely on the quality and functionality of the services on offer, without getting tripped up by IT policies.
4. Reducing in house IT resource usage: It also enables the IT department to concentrate on efficiently managing the means of communication and looking after a simplified web platform.
5. Economies of scale: SaaS providers can also deliver significant economies of scale as server and infrastructure costs are reduced when serving one instance of an application to many customers. Each customer therefore pays less to buy into the SaaS model than they would to set up equipment and personnel to run the application on site. This reduces costs for larger organisations and makes the applications available to smaller organisations who would otherwise find the costs prohibitive. It’s a new business model that enables the SaaS vendor to work with both the SME and enterprise markets. Everyone wins.
6. Short cutting procurement processes: LoB managers working within organisations with convoluted and time-consuming procurement processes, can acquire new applications via relatively low cost subscriptions which affect revenue rather than capital budgets and often come in ‘below the radar’ enabling managers to introduce new systems at a departmental level without lengthy, multi-level, budgetary approval processes. This approach makes it possible to pilot new applications , prove their worth and then spread the word to other departments. Vivantio has seen this happen time and time again with its customers.
Cons or myths surrounding SaaS?
1. Poor Integration: Some established on site vendors have highlighted that integration with other On Site systems remains an issue. SaaS providers in many application areas have already proved beyond doubt that On Demand and On Site systems integration presents no genuine issues
2. Security hazards: The data centres and the server platforms that SaaS providers rely on are typically a great deal more secure and robust physically and technically, than any server sitting in an organisation’s own office. It is also clear that one of the largest threats to data security in any organisation is misuse by authorised personnel not unauthorised external attackers. Sensible security policies and an effective training programme are key. Recent high-profile stories in the press regarding lost CDs and laptops provide all the proof that is necessary.
3. Loss of control: Although the misperception that SaaS means relinquishing control has reduced dramatically over the last three years, it remains an argument levelled against SaaS delivery. IT managers still worry about what will happen if the provider’s server goes down or there are problems with the internet connection. But on site servers are probably more vulnerable to downtime in reality. The question that really needs asking is ‘Is a typical IT department able to achieve the same levels of availability for the same price?’ Is an organisation willing to fund constant upgrades to the hardware platform? And by locking themselves in to a specific server platform on-site, an organisation has already placed a huge amount of control into the hands of the platform vendor – regularly having to deal with the headache of rolling out new versions of server operating systems, database engines and such like.
So in summary our view is that IT and service delivery managers are missing a trick if they cling onto the traditional on site-only approach for IT purchasing today, the same is true in service desk procurement as it is in most other application areas. By considering SaaS they could deliver a great deal of flexibility to the business units and reduce overheads in the process. It is clear that on the ground the SaaS cons are increasingly being proved to be myths and that on closer examination service desk customers are tending to go for the SaaS approach. So much so that we recently revealed that 70 per cent of our current customer base takes Vivantio Service Desk as SaaS and we predict that figure to rise to 80% by year end.
Benefits such as rapid deployment, easily customised applications and much lower total cost of ownership, all help the highly stressed and under-resourced IT or service delivery manager to be the hero and this message is now getting through.
About Vivantio Ltd
Vivantio is a specialist service desk software and Software as a Service provider. Vivantio provides an easy-to-deploy and use suite of service desk tools which are designed for their simplicity, whilst offering the functionality that service desk teams need to increase productivity through the automation of processes and the enabling of customer self-service. For more information please visit www.vivantio.com
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